Raise, a startup building Africa’s Carta, gets backing from 500 Startups – TechCrunch
As startups in Africa continue to grow and raise funds at a ridiculous rate, their capitalization tables expand. Most of the venture capital funds for most African startups come from foreign investors, making it imperative for African startups to incorporate abroad, especially in the United States.
The incorporation processes are quite complicated, and while most founders are still getting used to them, they risk messing up their capitalization tables. For example, some Nigerian startups are guilty of issuing preferred shares in naira and then canceling the issuance of dollar-denominated SAFEs when incorporated in the United States.
Raise, a startup building Africa’s Carta tackles these challenges and has received the support of 500 startups to evolve its technology.
In 2019, Marvin Coleby, Tina Nyamache, and Eugene Mutai decided to create a blockchain solution that would make it easier to buy and sell shares of pre-IPO companies in Africa. After running through several iterations, they found that most companies still struggle with the concept of fairness and liquidity. They spent money managing corporate structures for holding companies in Delaware, Canada and Europe corn maintained paper subsidiaries across Africa.
According to Coleby, most equity across Africa is still stored, tracked and updated using paper certificates, manual processes and fragmented government databases. This increases transaction costs for managing subsidiaries and issuing stock options for employees. It also inflates the costs of entering and exiting positions in private and public companies.
So they started Raise to help startups, investors, employees, and law firms manage business transactions, caps, and compliance..
On the platform, Raise’s clients can also automate due diligence, set reviews, track employee stock acquisition, and create routine documents for licensing and government documents in Nigeria and Kenya.
When Raise launched in 2019, it was in private beta and was supported by Binance Labs the only investor in its pre-seed round. Since launching a public beta in 2020, Raise has onboarded clients like Anjarwalla & Khanna, the largest law firm in Africa; the Bamboo, Workpay and Mono startups; and venture capital firms like Microtraction and Chrysalis Capital.
But the long-term problem Raise is trying to address is liquidity, Coleby told TechCrunch on a call.
“All we’re doing is finding a way to make it easier for founders, clients, employees, investors to get cash flow by investing in companies,” he said. “Companies raise funds, people invest and employees get stock options. yet, there are only one or two exits from time to time. This is because we are building with the model of Silicon Valley where we have to grow, evolve until we get a big release. From our perspective, liquidity doesn’t have to be that way. These can be small chunks of cash that employees and investors get over time. “
By this measure, African capital markets for private and public enterprises are painfully illiquid. It takes several months or years to buy or sell stocks, and, according to Raise, more than $ 1,000 billion in stocks in Africa are “illiquid, paper-based and denominated in inflationary currencies.”
Nigerian equity trading platforms like Chaka, Bamboo and Trove help Nigerians create liquidity for assets locally and internationally. yet, Raise aims to build the platform behind them to streamline more asset classes and investment opportunities.
While this is still in progress, Raise is organizing property data for African businesses and making it accessible. It’s a game similar to what Carta, a $ 3 billion company offering cap table software, is making for US businesses.
Over time, integration cap tables and equity data will also open up use cases for Carta to become a blockchain-based digital asset platform.. The plan is to become more like the Nasdaq of Africa for private companies like it hope to sell indices, ETFs, futures and assets for them. Coleby says in this way that Raise will become a capital engine for handling hundreds of billions of dollars in Africa’s trade and securities volume.
Coleby says the number of online businesses is growing 60% month-over-month. The platform manages around 200 capitalization tables with assets worth over $ 400 million. According to Coleby, the next phase of growth will be to integrate Series A and growth phase companies onto the platform..
The company is active in Nigeria and Kenya. Coleby says a tour de table is underway to continue to deepen these markets and experiment with financing and liquidity operations in the African venture capital space.
Next, Raise creates a marketplace that continues to connect and educate investors, employees, and founders on a single platform with their law firms to use trusted, verified data to close deals and issue call options. actions to employees.